Telstra opts for soft-sell on 3G mobile service

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Telstra will today become only the second telecom in Australia
to offer third generation mobile services but the low-key launch
reflects the changed expectations since Hutchison Telecom made a
glitzy singing and dancing 3G debut in 2003.

The softly, softly approach is well illustrated by the fact that
consumers will be hard pressed to find mention of the technology in
Telstra's ads that were scheduled to debut last night.

"It will be largely about services, so we will not be blasting
the technology at people and, in fact, it will be difficult for
people to distinguish 2G and 3G, it will be about what you
experience as a customer," said Mike Robey, who is running
Telstra's 3G marketing.

It is the services offered that Telstra is banking on to entice
new users to its high-speed network.

"The main difference between what we're going to offer and what
the other guys have got is content," Mr Robey said.

Telstra is hoping that its competitive edge with content will
make up for the fact that its new mobile cap plans - which are
available only on the more efficient 3G network - are hardly in the
same race with the aggressive cap plans on offer from its
rivals.

Mr Robey said the plans, which were the most aggressive ever
offered by Telstra, were designed to take cheap voice calls "off
the table" as an issue for potential customers, and put the focus
on the other services offered.

Mr Robey said that even the reduced content options available on
Telstra Active, with about 40 sites, "is still way better than what
the other guys have got".

Telstra's i-mode service - which has been available for six
months on the GSM network - is already offering 211 sites, although
not all of them will be available on the 3G service straight
away.

"The sheer variety and depth of services available gives Telstra
a big head start from other operators that have a more limited
scope of services," said tech research firm Ovum.

Although Ovum did have reservations about what it described as
i-mode's complicated billing and pricy content, others saw the
latter as a necessary compromise.

"Telstra is hopeful that the weaker voice (revenues) from 3G
capped plans would be offset by adding more content-related
services for subscribers," said Macquarie Equities.

Mr Robey said Telstra had learnt a lot from mobile operators
overseas and their experiences with mobile content.

"The key lesson is not to try and gouge people too much. You've
got to give people access to quite a lot of content and let them
choose, because if you do the choosing for them you are playing
god," he said, "And that's just not going to fly."

Telstra offerings will include a range of exclusive material
from the NRL, AFL and Australian Idol.

Ovum is predicting that Telstra, and rivals like Optus, will
still have a tough time building up content revenues.

"Ultimately, while the i-mode offering is a positive step for
Telstra, it is to be expected that the consumer reaction has been
muted," Ovum said.

"In large part this is a function of the Australian market,
which at present records very low packet data usage.

"We believe this effect will also mute 3G launches from Telstra
and Optus."

But Telstra could get some help from a consolidating market.

"Is it realistic for us to assume that the world's two largest
players in 3G - Vodafone and 3 - continue operating in the
Australian mobiles market with a combined market share of 20 per
cent? In a word, no," warned Goldman Sachs JBWere analyst Christian
Guerra.